The Supreme Judicial Court has added yet another reason for employers to properly classify their workers — the threat of a direct lawsuit by non-employees injured on the job, even if those workers first collect hefty workers’ compensation payouts. In a May 23, 2011 decision, the Court held that the state law barring injured employees from suing their employers does not apply to subcontracted workers. Two victims of a residential construction project explosion were permitted to first settle with the defendant’s workers’ compensation insurer, then sue the company that controlled the worksite where they were injured.
In reversing a lower court decision, the SJC sent a clear message to companies that continue to flaunt Massachusetts’ virtual ban on independent contractor/employer relationships: providing workers’ compensation insurance to non-employees does not provide liability protection. The court strictly interpreted Massachusetts General Laws chapter 152, the state’s workers’ compensation statute, to require businesses to maintain proper coverage for employees only in order to claim protection from personal injury suits. Though the case dealt with a construction contractor and the workers of its uninsured subcontractor, the strict statutory interpretation is a warning to employers who misclassify workers as independent contractors. Courts, it seems, are unlikely to protect those who violate the law through misclassification, even if, as is often the case, they provide injury injurance.
The case involved two men who were employed as waterproofers by an uninsured subcontractor. An explosion on the job site killed one worker and seriously injured his son. Because the subcontractor did not carry workers’ compensation insurance, the two men sought and obtained benefits from the carrier for the general contractor, as provided by law. After receiving settlements, they sued the contractor for damages. Though a lower court held that acceptance of the workers’ compensation payments barred a subsequent suit against the insured business, the SJC held that “Immunity under the [workers' compensation] act applies only to the ‘[i]nsured’, which is an employer who provides workers’ compensation insurance to ‘his employees.‘” It follows that, where independent contractors are hurt at work, they too can sue the companies that pay them, regardless whether damages protection is somehow provided.